Lexgroup Newsletter (Issue No. 283)

Date: Nov 2017


1. Amendment to the Standards of Withholding Rates for Various Incomes

On October 25, 2017, the Ministry of Finance ("MOF") announced that for a foreign individual (including legal entity), or an individual (including legal entity) of the Mainland Area residing and staying in the Taiwan Area for less than 183 days in a taxable year, the tax payable for dividends distributed by invested Taiwan companies shall be withheld at a rate of 21%.

Reported by: Stacy Lo / Peter Huang

2. Amendment to the Enforcement Rules of the Customs Act

On October 12, 2017, the MOF announced that goods, not limited to non-consumables, for display at an exhibition held by the government may be exempted from the custom tax; the waste of consumable goods during an exhibition may be deemed as exported goods after being recognized by the competent authority.

Reported by: Stacy Lo / Peter Huang

3. Amendment to the Customs Import Tariff

On October 11, 2017, the MOF announced that for the enforcement of the supply chain of the domestic solar photovoltaics industry, imported goods used exclusively for the manufacture of solar photovoltaic modules may be exempted from tax.

Reported by: Stacy Lo / Peter Huang

Intellectual Property

4. Draft Amendment to the Copyright Act

The draft amendment to the Copyright Act ("Draft") was passed on October 26, 2017 by the Executive Yuan Coucil (Cabinet) and is heading to the Legislative Yuan for final approval.  The Draft features a total of 93 of amendments and 17 newly added articles, undertaking seven years.  We summarize the key points below:

(1) To refine the definitions of the certain activities of copyright enforcement; for example, the activity of “public recitation” is incorporated into that of “public performance;” 

(2) To amend the provisions regarding the ownership of copyright so that the ownership may be determined under an agreement between an employee and an employer, or an author and a sponsor.  For example, the two parties may share the copyright, or a third party may own the copyright;

(3) To clarify the definitions on the Right of Distribution and the Right of Rental, however, the action of displaying or holding the infringing products is restricted under the Draft; 

(4) To consolidate the provisions regarding the rights of performers and sound recording works, and to add the performer’s exclusive right to record the performance on video or audio recordings. 

(5) To additionally stipulate the circumstances of fair use, such as the uses for the purpose of distance education or digital archives in national Libraries; 

(6) To allow the compulsory license of the copyright of orphan works; 

(7) To solve the problem that it is very difficult to satisfy the burden of proof, it relieves the burden of proof regarding the damage, to stipulate that the infringee may choose either to calculate the damage on the basis of license royalties, or to request the court to determine an amount between NT$10,000 and NT$1,000,000 based on the seriousness of the infringement.

(8) For certain criminal penalties regarding copyright infringement, to cancel the minimum of six-month imprisonment. 

Reported by: Jolene Wang / Crick Liang

Securities and Exchange Act

5. Financial Supervisory Commission's Ruling on Disgorgement Arising from Short-swing Trading

The Financial Supervisory Commission ("FSC") issued a ruling on October, 16, 2017, that insiders' purchase of fraction shares issued due to capital reduction should be "purchased" under Paragraph 1, Article 157 of Securities and Exchange Act, because such purchases are at the discretion of insiders who need to pay purchase consideration.  The acquisition cost shall be the actual purchase price and acquisition date shall be the base issuance date of new shares issued via capital reduction.

Reported by: Mike Lu / Rady Lee

Government Procurement Act

6. Press Release for the Amendment of Government Procurement Act

On October 16, 2017, the Public Construction Commission, Executive Yuan issued a press release to respond to the criticism of the Ministry of Transportation and Communication ("MOTC") on the amendment to the Government Procurement Act ("GPA").  We summarize the points as below.

(1) The deletion of "different qualities" in the most advantageous tender is made by reference to the regulations of the Government Procurement Agreement and the Federal Procurement Regulations of the U.S.

(2) The establishment of a procurement review committee for any large procurement over NT$200 million (approximately US$6,700,000) is required to carefully assess the needs of the procurement.

(3) The term "forged or changed documents" is changed to "untrue documents" to cover all untrue documents no matter whether the documents are authorized to be produced or not.

(4) The confiscation of a bid bond shall take the cause and attribution of liabilities into account. 

Reported by: Kang-Shen Liu / Naiju Kuan


7. Amendments to "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises"

On October 19, 2017, the FSC announced amendments to "Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises".  The draft of the amendments had been pre-announced by the FSC on August 3, 2017.  Please refer to Item 8 of No. 278 of the Lexgroup Newsletter for a summary of the amendments.

Reported by: Stacy Lo / Nereid Lin

Insurance Entities

8. Regulations Governing Use of Insurer’s Funds in Special Projects, Public Utilities and Social Welfare Enterprises

The FSC issued a ruling on October 17, 2017, that the insurance entities shall invest in the Fund, funded by the National Investment Company and set up by the National Development Fund and approved by the Administrative Yuan, and the Fund is invested in the items which are approval in Article 1 of the GinGuanBaoTsaiTz No.01610908021 ruling issued by the FSC. This shall be deemed as having applied to Paragraph 6 of Article 2 of Regulations Governing Use Insurer’s funds in Special Projects, Public Utilities and Social Welfare Enterprises, other uses of which are in line with government policies.

Reported by: Stacy Lo / Allen Lai

Bank Entities

9. Directions of Bank Apply to Invest in Venture Capital and Governing Consulting Enterprises

On October 24, 2017, the FSC announced the draft "Directions of Bank Apply to Invest in Venture Capital and Governing Consulting Enterprises". The purpose of the draft is to relax the restriction on bank investment of venture capital.  We summarize the key point below:

(1) This redefines that venture capital and its governing consulting enterprises are finance businesses.

(2) Bank entities can have a 100% owned venture capital.

(3) The total amount which a bank invests in the venture capital cannot rise above 3% of the bank’s net value.

(4) If there is only a bank subsidiary and venture capital is investing in only one company which is not listed on Taipei Exchange, the amount that the venture capital invested does not need to be included in the amount restriction provided in Paragraph 5 of Article 37 of Financial Holding Company Act.

(5) The highest leverage ratio can be 125% for venture capital which is bank’s subsidiary.

(6) Investments in "5+2" innovative industries, as in Paragraph 2 of Article 74 of the Banking Act, in following government policy, no longer have to obtain a certificate of cooperation with a government policy issued by related regulators.

Reported by: Stacy Lo / Allen Lai


10. Drafts of Amendments to the “Review Guidelines for Establishment of Satellite Broadcasting/Television Enterprises and Offshore Satellite Broadcasting/Television Enterprises" and "Review Directives for Consulting Committee for Establishment, Evaluation and License Update of Satellite Broadcasting/Television Enterprises and Offshore Satellite Broadcasting/Television Enterprises"

On October 18, 2017, the National Communications Commission announced that it passed drafts of amendments to “Review Guidelines for Establishment of Satellite Broadcasting/Television Enterprises and Offshore Satellite Broadcasting/Television Enterprises" and "Review Directives for Consulting Committee for Establishment, Evaluation and License Update of Satellite Broadcasting/Television Enterprises and Offshore Satellite Broadcasting/Television Enterprises".  The drafts aim to relax the current restrictions to facilitate relevant practices.  Key amendments include the requirement of 6-year financial plans for establishment of satellite broadcasting/television enterprise is changed to 3-year, the requirement of providing program schedules of every first week for a year is changed to every first week for half of a year, and the requirement of disclosing on websites the program schedules for the current and next week is changed to the program schedule for the current week.

Reported by: Kang-Shen Liu / Nereid Lin


11. Relaxing the Ceiling on SICE Investment in Funds with Its Own Capital

On October 16 2017, the FSC issued a ruling to relax the ceiling on the total amount of a SICE’s own capital that it may use to invest in SITE funds, publicly offered futures trust funds and offshore funds offered in Taiwan from no more than 30% to no more than 40% of the SICE's net value.

Reported by: Jeffrey Liu / Aaron Lai

Private Placement

12. Amendment to a Ruling Related to Offeree defined under Subparagraph 2, Paragraph 1, Article 11 of the Securities Investment Trust and Consulting Act

On October 19, 2017, the FSC issued a ruling to amend relevant conditions and requirements for offeree of private placement, the key points of which we summarize below:

(1) Regarding one of the qualifications for a natural person that the total assets invested or put in the private placement institution or delegated institution shall exceed NT$15 million, the calculation of which may include the amount of deposits and other investments so it is no longer limited to discretionary or fund investments;

(2) Regarding the qualifications for trust enterprises which signed trust deeds, they will be subject to the qualifications of the trustor; and

(3) The evaluation methods for private placement institutions or delegated institutions to identify whether subscribers are equipped with sufficient professional knowledge of financial products and trading experiences shall be incorporated into the process of know your customer and be subject to a resolution of the board of directors.

Reported by: Jeffrey Liu / Caitlyn Kao


13. Press Release for the Amendment of Labor Litigation Procedure Law

On October 20, 2017, the Judicial Yuan issued a press release to clarify the important direction of the amendment of the Labor Litigation Procedure Law.  We summarize the key points below.

(1) The court shall establish a labor court and select judges who have expertise and experience in labor law;

(2) It specifies the definitions of labor matters, employee, and employer, where intern, apprentice and trainee are included in the definition of employee;

(3) Where litigation is initiated by an employee, in addition to the court for the employer's residence and registered office, the court for the work premise of the employee shall also have jurisdiction;

(4) The court fee is reduced.  Take reinstatement litigation for example; if the term is indefinite, the basis for the court fee is reduce from the wages for 10 years to the wages for 5 years;

(5) It establishes labor mediation procedures, where the labor mediation committee shall be composed of 1 judge of the labor court and 2 mediators who have expertise and experience in labor law.

Reported by: David Tsai / Naiju Kuan


14. Draft Amendment to the Regulations of Civil Air Transport Enterprise

On October 20, 2017, the MOTC announced a draft amendment to the "Regulations of Civil Air Transport Enterprise", which amended the qualifications for applying to be civil air transport enterprises and the subsequent requirements of paid-in capital and minimum size of fleets.  In addition, civil air transport enterprises shall request those who demand charter flights to solicit passengers or cargo only after they are approved by the Civil Aeronautics Administration.

Reported by: Kang-Shen Liu / Zachary Peng

15. Draft amendment to the Civil Aviation Act

On October 26, 2017, the Executive Yuan passed the amendment to the Civil Aviation Act, which is subject to the Legislative Yuan's review.  The Amendment does the following:

(1) Adds regulations to administer unmanned aircraft systems, such as registration of equipment, requirement of operation licenses, restrictions on airspace and restrictions on operation.

(2) Requires civil air transport enterprises to submit relevant plans and apply for the MOTC's approval before suspension or closure of business.  Such business may not suspend or close business until 2 months after the MOTC's approvals.

(3) Authorizes the MOTC to stipulate the regulations governing time limit of flight to enhance administration of crews' fatigue.

Reported by: Kang-Shen Liu / Zachary Peng

The information on this page may have been provided by a contributor to ChinaGoAbroad, and ChinaGoAbroad makes no guarantees about the accuracy of any content. All content shall be used for informational purposes only. Contributors must obtain all necessary licenses and/or ownership rights from the relevant content owner(s) before submitting the same to ChinaGoAbroad for publication. ChinaGoAbroad disclaims all liability arising from the publication of content received from contributors. Links may direct to third party sites out of the control of ChinaGoAbroad, and such links shall not be considered an endorsement by ChinaGoAbroad of any information contained on such third party sites. Please refer to our Disclaimer for more details.